Company in Sweden
An entrepreneur who intends to run a business in Sweden should choose the type of business at the very beginning. In the case of a sole proprietorship, there is no requirement for start-up capital, but the owners of this type of company are liable with all their assets for all obligations of the company. Opening a company, on the other hand, requires a certain amount of start-up capital and a number of other conditions.
After choosing the type of business, the entrepreneur must register the company with Bolagsverket, the Swedish Companies Register. This obligation does not apply to owners of sole proprietorships, but they also have this option. This ensures that the name of the Swedish company will be protected in the territory and that another entrepreneur will not be able to register the same company name. Companies that are required to register with the Companies Register are all types of companies (including limited liability company and limited partnership) and cooperative associations.
The last step of setting up a company in Sweden is to register with the Skatteverket, the Swedish Tax Agency. When registering, a certified copy of an identity document, such as a passport, is required. After the application, a coordination number is assigned by the office, which temporarily serves as an identification number for official applications.
A Swedish business should also be registered for F-tax payer - on activities (f-skatt) and VAT (moms). If the company intends to employ workers, registration as a Swedish employer is necessary. The owner of a Swedish company who simultaneously employs another entrepreneur registers as a payer of FA tax, instead of the standard F tax. FA tax is a combination of f-skatt and A tax (on employment).
The F-tax (f-skatt) indicates that the company's customers are not responsible for deducting tax and paying employer contributions. Information about the payment of tax can be included on invoices issued by the company, in contracts and in offers.
Registration with the Skatteverket can be done electronically via the verksamt.se website or, traditionally, directly at the office (by completing form SKV 4632). Online registration can only be done by those who have a BankID (Swedish digital signature).
Documents and certificates that are delivered to the Swedish authorities should be translated into Swedish.
Personnummer - what do you need to know?
Foreign entrepreneur in Sweden
- A company in Sweden has a personal entrepreneur identification number (personnummer) to identify it. To obtain one, you must apply using form SKV 4620.
- People who have lived in Sweden for at least one year and those planning to stay longer than one year can register with the Swedish Population Register. It is necessary to present a residence permit or proof of right of residence in Sweden.
- Once you have registered with the tax office, you will be given a personal identification number (personnummer), which is necessary both for running a business and for registering with Försäkringskassan (the Swedish Social Insurance Agency).
The starting point that sets the path for setting up a business in Sweden is the country of origin of the entrepreneur. Those who wish to set up a company must indicate their home country in order to register their business in Sweden. Poland is part of the European Economic Area and the European Union, so Poles who emigrate to Sweden can open their own business within the country, provided they legalize their stay and are able to support themselves.
A residence permit in Sweden - what do you need to know?
- The Swedish Migration Board (Migrationsverket) issues residence permits.
- You can apply for a residence permit at the office located at the Swedish embassy in Poland or at a Polish consulate in Sweden.
- The permit is issued for five years, and after two years, the Migrationsverket examines the financial situation of the company.
- When the entrepreneur has no problems supporting himself or herself and the members of his or her family in Sweden, the permit is maintained, while if the company's situation is unstable, the authority has the possibility to revoke the residence permit in Sweden.
Formalities in a Swedish company
Direct influence on the financial situation and development of one's own business is possible by establishing one's own business in Sweden. Running your own business brings with it an obligation to comply with the regulations that apply in Sweden. Entrepreneurs must also fulfil certain obligations, such as those related to running a business or employing staff.
What is worth knowing about formalities in a Swedish company?
- Every company in Sweden should have a bank account that will be used for business transactions. A bank account is especially important for companies obliged to deposit their initial capital.
- To open a bank account with a Swedish bank, the entrepreneur should present proof of identity (passport or identity card), and in some establishments a Swedish document (a tenancy agreement that confirms residence in Sweden and an F-tax certificate) must be presented. If you have a personnummer (personal identity number), you can open a bank account online.
- The owner of a Swedish business should be aware of the registries that are required. These include the Bolagsverket (Business Register), the VAT Register and the Försäkringskassan (Swedish Social Insurance Agency).
- Swedish business obliges you to settle taxes, pay dues and submit documents on time.
- The entrepreneur should regularly monitor all company payments, which are related to payments from customers and delivery charges.
- Maintaining a transparent financial situation is possible by verifying current liabilities and receivables. This also makes it possible to take the necessary steps to resolve any discrepancies.
- Monitoring payments makes taking care of company records easier. In the event of an audit from the tax office (Skatteverket), the collection of income and expense invoices, receipts and account statements can prove useful.
- A Swedish company is obliged to keep its data up to date. Changes that concern contact details or the company name should be reported to the customers, and to the relevant institutions (bank, tax office).
Invoices in Sweden
Swedish invoices are most often in electronic form. Paper forms have been withdrawn by government agencies and state bodies. If a Swedish company supports e-invoicing, it receives documents in a special standard (Svefaktura).
A company in Sweden that issues invoices should have a company bank account number and an identification number. The invoice must clearly indicate the type of transaction. It should be prepared and sent to the customer on the day the goods or services are delivered.
Limited liability companies in Sweden must necessarily include the identification number, name and registered office of the company (city or municipality) on the invoice.
Accounting in a Swedish company may be carried out by the owner himself or with the help of a professional accountant. Invoices cannot be issued via Microsoft Excel; certified software must be available for this purpose. The company is obliged to store invoices using a programme that meets all security requirements.
Types of business in Sweden
Poles have the opportunity to open their own business in Sweden, just as citizens of the country do. Thanks to Poland's membership in the European Union and the European Economic Area, starting a business in Sweden is not difficult.
The process of registering a company in Sweden depends on the type of company, as different types of activity require certain conditions in the registration process or having a certain amount of share capital.
In the case of a sole proprietorship, business registration is quick and does not require start-up capital. This type of business is most often chosen by self-employed Poles. Other types of business in Sweden carry a more complicated registration process. A number of formalities and the requirement for high start-up capital result in Swedish limited liability companies and limited partnerships often being inaccessible to foreigners.
The most common types of businesses in Sweden:
- sole proprietorship (ENSKILD NӒRINGSIDKARE);
- civil partnership (ENKELT BOLAG);
- commercial company (HB - HANDELSBOLAG);
- subsidiary of a foreign company (FILIAL).
Swedish sole proprietorship
Enskild nӓringsidkare, or sole proprietorship in Sweden, is one of the most popular choices of Polish entrepreneurs who start a business in this country. As an alternative to being employed by another company, a sole proprietorship in Sweden allows you to have a real say in the profit of your business and the growth of your company.
What is worth knowing about a sole proprietorship in Sweden?
- This type of Swedish company is mainly recommended for young people who cannot foresee the profits of the company and have relatively small resources.
- A sole proprietorship has no legal personality.
- The owner is fully responsible for all liabilities of the company. There is no division between business and personal assets.
- A Swedish sole proprietorship must be registered with the Skatteverket, the tax authority. To register, the business owner must prepare the following documents:
- a completed application form for foreign entrepreneurs;
- a certified copy of an identity document (e.g. passport);
- a certificate of not being in arrears with Social Security contributions in Poland;
- certificate of no tax arrears in Poland.
- The form together with the required attachments should be sent to the foreign cooperation department in Malmo (Swedish Tax Agency (Skatteverket), Utlandsskattekontoret, SE-205 31 Malmö, Sweden).
- The duration of registration is between two and six weeks from the date of application to the tax office. The cost of registering a sole proprietorship with Bolagsverket is SEK 1,400.
- A Swedish sole proprietorship is subject to VAT when it sells goods or services. The company is then obliged to charge the appropriate amount of VAT (25%, 12% or 6%). Swedish VAT is settled on the basis of a tax return submitted annually, quarterly or monthly.
- Income tax is settled by a sole proprietorship under the rules for natural persons, as it is not a legal entity.
Company in Sweden
The biggest advantage of companies is the transparent financial and legal situation that results from the strict requirements that apply to accounting, bookkeeping and reporting. A Swedish company is designed for those who are able to foresee the future profits of the company and plan to trade large sums of money.
- To establish a Swedish company, certain conditions must be met. An entrepreneur who intends to establish a company in Sweden should primarily:
- have legal capacity,
- have no private debts,
- have no criminal record,
- be of legal age.
- An entrepreneur who wants to set up a company should register with the Migration Board (Migrationsverket) and legalize residence, and deposit start-up capital of a certain amount in the company's bank account.
- The initial capital depends on the type of company. It can range from SEK 50,000 (for a limited liability company) to SEK 500,000 (for a public limited company).
- A notarized deed of incorporation of the company is required and within six months an entry must be made in the Bolagsverket (company register).
Registration of a Swedish company with Bolagsverket costs SEK 700-1700. The time to wait for confirmation counts from the date of application - three to six weeks.
A Swedish company has legal personality.
Income tax is 28% on its profit.
If a company in Sweden sells services and goods that are subject to VAT, it is required to charge a corresponding amount of tax of 25%, 12% or 6%. Swedish VAT is settled on the basis of a tax return, which is submitted monthly, quarterly or annually.
Civil partnership - enkelt bolag
Refers to a contract between partners who are liable with their assets for all actions. It is the simplest type of company and is unincorporated. A company may be established by two or more persons.
Commercial company - Handelsbolag - HB
This type of company can dispose of its own assets as well as liabilities, as it has legal personality. Commercial company is required to submit an annual company report. The partners are liable proportionally for the company's liabilities.
Limited partnership - Kommanditbolag - KB
The initial capital of this type of company is not large. The partners are jointly and severally liable for all liabilities. The company is required to prepare an annual financial statement.
Limited liability company - Aktiebolag.
This type of company is the majority of companies registered in Sweden. They have legal liability and the partners of the company are not liable with their assets for liabilities. However, the law in Sweden allows for this in certain justified cases.
Branch - Filial
The Foreign Branches Act regulates the operation of a branch of a company in Sweden. A branch is subject to Swedish law in the same way as other entities operating in the country, but does not obtain legal personality. Within Sweden, income and expenses remain the property of the parent company. It is necessary to have its own accounts, independent of the company, and to appoint a director with appropriate powers.
VAT (moms), the tax on goods and services, applies in Sweden to all transactions occurring at each stage of production and distribution. By transactions are meant:
- the provision of services,
- the sale of goods,
- exchange or payment of one's own from a company.
A Swedish company is obliged to pay VAT. It also has the right to deduct it. It then pays the difference between input tax (paid on purchases) and output tax (charged on sales).
A business in Sweden must be registered for VAT when:
- transports goods necessary for its business to another EU country, without changing the owner of the goods,
- sells goods or services to other EU countries,
- sells goods or services to non-EU countries.
Co warto wiedzieć o podatku VAT w Szwecji?
How can Swedish VAT be accounted for?
- VAT registration can be done traditionally by completing form SKV 4620, or electronically via skatteverket.se.
- If all the company's customers are registered as Swedish VAT payers, the company in Sweden does not need to be registered in the VAT register as a payer.
- Where purchases are necessary to run the business, the business owner has the option to deduct input tax. Goods that are excluded from deductions are, for example, passenger cars.
- If a company in Sweden is subject to VAT, it should keep records indicating the amount of input tax.
- The company's invoices must include the percentage of VAT that goes into the sales price.
- The VAT charged is only deductible if the VAT amount is shown on the invoice.
- VAT has 3 rates:
- In Sweden, VAT is settled through a VAT return. It can be filed once a month, once every three months or once a year.
- The frequency of the VAT return is dependent on the company's annual turnover. It is determined at the stage of submitting the registration application to the Skatteverket.
- The deadline for payment of VAT is the 12th of each month. For medium-sized companies, it must be paid by the 26th of each month at the latest.
- A Swedish company that sells goods to a buyer operating within the European Union, who has registered for VAT in one of the EU countries, does not charge VAT, which should be declared by the buyer.
- VAT in Sweden is only charged if the purchaser has not registered for VAT.
- No tax is charged when goods are exported to a country outside the EU.
- Industries such as education, banking and financial services, medical care, among others, are exempt from Swedish VAT.
- Once a month, if the company is large and its turnover exceeds 40 million SEK per year.
- Once every three months or once a month if a medium-sized company has a turnover of between SEK 1 million and SEK 40 million per year.
- Once a year, or once every three months, or once a month if a small company has a turnover of less than 1 million SEK per year.
Income tax in Sweden
The obligation to pay a certain amount of income tax applies to all companies in Sweden. Income tax consists of national tax and local tax - tax paid to the municipality (kommun) and tax paid to the region (landsting). The local tax is used, among other things, to finance the municipal health care system as well as the education system.
Swedish income tax rates depend on the annual income of the company and the region of the country. The national tax is calculated on the basis of the income received in a given year, if that income exceeded the amount indicated.
In 2020, the national tax was:
- 0% - if the income did not exceed SEK 490,700;
- 20% - if income exceeded SEK 509,300.
Local tax depends on the region concerned. It ranges from 30% to 35%. The average local tax rate is 32%.
Legal entities pay income tax of 28% on company profits.
Persons working in Sweden for a domestic or foreign employer are taxed at a flat rate of 25 per cent if they are not Swedish tax residents.
The income tax does not cover persons working for a foreign employer who does not have a permanent establishment in Sweden and persons who are not Swedish tax residents, provided that they have spent less than 183 days during the year in Sweden.
A company in Sweden pays income tax based on the amount of income declared in the year. When registering a company, the entrepreneur estimates the expected income, while the tax office calculates the amount of advance income tax payments payable each month.
It is possible to correct the preliminary tax declaration during the tax year.
At the end of the tax year, the business owner must prepare a proper tax return, which will form the basis for calculating the amount of tax for the year. If the declared amount of profit turns out to be greater than the profit actually made, the entrepreneur will receive a refund of the overpaid tax, while if the business makes more profit than anticipated in the preliminary tax return, the owner will be required to pay the arrears.
The tax return is sent by the Swedish Tax Agency to a digital mailbox or in paper form. The deadline for creating a digital box is 27 February at the latest. The annual return for those with digital boxes is sent between 4 and 11 March, while the paper version is sent between 13 and 15 April. With the 31 March, the deadline for online tax returns expires, and for paper returns, the entrepreneur has time until 4 May.
The payment deadline indicated on the final tax return is always at least 90 days from the date of the tax office's decision.
Permits for Swedish companies
It is possible that a Swedish company will need to have an additional permit or certificate. Depending on the industry, different types of Swedish business encounter a requirement to present a permit, which relates to the type of business, the premises where it is carried out or the person who carries it out. Permits for companies are issued by either national authorities, such as the National Food Agency, or local authorities, such as administrative or municipal councils.
Special business permits are required for specific areas of the economy. This applies to such businesses that are in the food or catering industries. Such a business is required to have a business licence, which is issued by the National Food Agency. For a business that is involved in transport and related matters, a permit is required from the Swedish Transport Agency. Information on the individual permits for companies in Sweden can be found at verksamt.se.
A work permit is not required for Swedish business. However, it does apply if you intend to stay in Sweden for longer than three months.
An application for a residence permit must be submitted individually, but in the case of minors this should be done by the child's parent or legal guardian. You can apply free of charge at the Migration Board, the Swedish embassy in Poland or the Polish consulate in Sweden. If the application is rejected, it is possible to appeal to the Aliens Board. This must be done within three weeks of receiving a negative decision from the Migration Board.
The owner of a Swedish company has the possibility to obtain a residence permit if he/she presents either a certificate of registration of business in Sweden or a document that proves that business is conducted in the country.
Costs associated with running a Swedish company
The incurring of certain costs is closely related to running a company in Sweden. Their amount usually depends on the type and nature of the business, the number of employees and the turnover of the company.
The main cost of a Swedish business is taxes, which are paid periodically to an individual account in Skatteverket. For individuals, such as Swedish sole proprietorships, income tax is between 30 and 55 per cent of the company's profit. Legal persons, such as companies, pay income tax of 28% on the company's profit. When a company provides services that are subject to VAT, it should be registered in the Swedish VAT register and pay output tax at the appropriate rate of 25%, 12% or 6%.
When a company in Sweden hires employees, it is obliged to pay the relevant taxes - the employer's tax, together with employee contributions, totals 31.42% on the tax base, i.e. the amount of gross salary including other employee benefits.
The creation of share capital is a cost that a company must incur in Sweden. Depending on the type of business, it has a certain amount - from SEK 50,000 to SEK 500,000.
Employees in a Swedish company
When running a business in Sweden, it is often necessary to hire employees. Those who come from EU countries do not need a work permit. If, on the other hand, the employees are non-EU citizens, then it is necessary to contact Migrationsverket (the Swedish Migration Board). When a foreign employer hires temporary workers from outside Sweden, it should also report this to the Swedish Work Environment Authority.
A Swedish company that plans to employ workers should report the employment to the tax office. An entrepreneur who has registered as an employer will receive PAYE forms on a monthly basis. These enable the payment of employer contributions and tax for employees. The form indicates the amount of salary and employee benefits, the employer's contributions and the calculated tax. The entrepreneur should pay the contributions and tax into an individual account at the tax office. It is also the employer's responsibility to make tax deductions from wages and other employee benefits.
The contributions and taxes payable by an employer with employees amount to a total of 31.42% of the tax base (gross salary + other benefits). The employer's tax (arbetsgivaravgifter) consists of, among other things:
- payroll tax (11.62%),
- pension contributions (10.21%),
- insurance premiums (3.55%).
Employer contributions and employee tax should be paid by the company in Sweden by the 12th of each month. In total, employee contributions amount to 31.42% of the tax base.
An employment contract in Sweden can be concluded verbally, however, according to the applicable Employment Protection Act, the employer is obliged to provide information on the terms and conditions of employment in writing. This means that the employment contract should take the form of a written agreement to regulate the performance and commencement of work.
A Swedish employee is entitled to sick pay. The sickness benefit is 80% of the average salary, including employee allowances. When an illness is reported, the employer determines the appropriate amount of benefit on the basis of the salary and other benefits.
You can draw your pension in Sweden at any time after the age of 61. No retirement age is set there. The pensioner may receive the full benefit or continue to work and collect a certain portion of the pension.
A pension in Sweden is calculated on the basis of taxes paid and social security contributions from the age of 16. The Swedish Pension Agency takes into account all income that has been received as a result of working in Sweden, as well as funds resulting from pensions, unemployment benefit, parental leave, stipends received, rehabilitation benefits, etc. The owner of a Swedish business receives a benefit calculated on the basis of earnings. The amount is paid out of the earnings and the selected pension fund.
What is worth knowing about pensions in Sweden?
- The general pension in Sweden is paid for the rest of the recipient's life.
- The pension may be income-related, there may also be a contributory pension and a guaranteed pension.
- Income-related pension is 16% per year of earned income, which is the basis for deducting the pension and other Swedish benefits that are taxable. Income is defined as salary from work, income from a business, unemployment benefit, pension, rehabilitation and training allowance and parental allowance.
- The contributory pension is 2.5% of annual income, placed in a selected pension fund or automatic state fund.
- The guaranteed pension applies to people with low or no income. Its amount is dependent on the pension, depending on income, marital status and period of residence in Sweden. It is available to persons who have reached the age of 65.
- The occupational pension is a benefit that comes from the employer. It covers:
- manual workers employed in the private sector,
- persons employed by the state administration,
- persons employed by the regions and municipalities,
- white-collar workers employed in the private sector.
- Note that not every employer provides an occupational pension. An occupational pension in Sweden, in addition to the base benefit, also includes sickness benefit and protection for the immediate family in the event of the employee's death. It is paid either indefinitely or over a given period of time - five, ten, fifteen or twenty years.
- Individual pension savings mainly apply to the self-employed. You can save via an insurance company or via a bank.
Social benefits for entrepreneurs in Sweden
The use of health insurance is possible for sole proprietorships in Sweden if they pay taxes and social contributions. Among the benefits we can distinguish between sickness benefit, maternity benefit, childcare benefit and unemployment benefit.
Sickness allowance, which an entrepreneur is entitled to in the event of incapacity or illness, is calculated on the basis of business income.
The Swedish Social Insurance Agency determines the entrepreneur's entitlement to sickness benefit, together with the amount.
The standard amount of sickness benefit is 80% of the business income. The exact amount - SGI - is determined by taking into account a number of criteria, such as the type of business. An entrepreneur in Sweden usually receives the benefit for a fortnight. If he or she provides a medical certificate of incapacity to work to the Social Insurance Agency, it is possible to continue the benefit.
The business owner is not entitled to payment of sickness benefit if the business does not show an income.
Any woman who works or runs a business in Sweden is entitled to maternity benefit. The benefit is paid in the last weeks of pregnancy, at 80% of the amount of the last income. The benefit for the first child is paid for 480 days, with a maximum of 60 days to be taken before the birth.
Receiving childcare allowance is also possible if you run a business in Sweden. The owner of a sole proprietorship has the possibility to apply for the benefit, which is calculated on the basis of the income received by the Swedish business. In this case, low or no income does not exclude the possibility of receiving child benefit. Child benefit for a child who is a Swedish citizen up to the age of one is paid for 480 days.
If a Swedish entrepreneur closes his/her business, he/she has the possibility to apply for unemployment benefit.